DEF 14A of Target Hospitality Corp., Apr 8, 2025

DEF 14A of Target Hospitality Corp.

Filed Apr 8, 2025 · FY20240001104659-25-032818

Open on EDGAR

  1. Live Webcast

    | EXECUTIVE COMPENSATION | 43 | | Compensation Committee Report | 43 | | Summary Compensation Table | 44 | | Grants of Plan-Based Awards for Fiscal Year 2024 | 46 | | Outstanding Equity Awards at 2024 Fiscal Year-End | 47 | | Option Exercises and Stock Vested in Fiscal Year 2024 | 49 | | Potential Payments Upon Termination or Change in Control | 49 | | Employment and Separation Agreements | 53 | | CEO Pay Ratio | 56 | | Pay Versus Performance Disclosure | 57 | | PROPOSAL 4: SECOND AMENDMENT TO THE INCENTIVE PLAN | 62 | | Overview | 62 | | Purpose of and Reasons for the Amended Incentive Plan | 62 | | Material Terms of the Amended Incentive Plan | 62 | | Material U.S. Federal Income Tax Consequences | 66 | | Section 409A of the Code | 67 | | Deductibility of Executive Compensation | 67 | | Awards Subject to Shareholder Approval | 67 | | New Plan Benefits | 68 | | Equity Compensation Plan Information | 68 | | CERTAIN RELATIONSHIP AND RELATED PARTY TRANSACTIONS | 69 | | Review, Approval or Ratification of Transactions with Related Persons | 69 | | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 71 | | Beneficial Ownership | 71 | | OTHER MATTERS | 73 | | Delinquent Section 16(A) Reports | 73 | | Matters Raised at the 2025 Annual Meeting Not Included in this Proxy Statement | 73 | | Stockholder Proposals and Director Nominations for the 2026 Annual Meeting | 73 | | Access to Annual Report on Form 10-K | 73 | | Information about the Virtual Annual Meeting and Voting | 74 | | Stockholders of Record — Voting | 76 | | Beneficial Owners — Voting | 76 | | Stockholders of Record — Revoke | 77 | | Beneficial Owners — Revoke | 77 | | Annex A — Second Amendment to the Target Hospitality Corp. 2019 Incentive Plan | A-1 |

  2. DIRECTOR NOMINEE BIOGRAPHIES

    DIRECTOR NOMINEE BIOGRAPHIES Our Board oversees our business and affairs. Set forth below are the biographies of each of our director nominees.

  3. DIRECTOR NOMINEE BIOGRAPHIES

    | James B. Archer | | | | Director Since: 2019 | Age: 54 | | | Mr. Archer joined Target in 2009 as Chief Operating Officer and has been in his role as CEO of Target since 2014. ■ With more than 25 years in the specialty rental and hospitality industries, Mr. Archer is a proven leader with a track record of success in executive management. ■ Mr. Archer began with GE Capital Modular Space and then Resun Leasing from 1994 – 2004 where he primarily served in Senior Leadership roles ranging from Senior Vice President, VP of Operations and VP of Sales, before holding COO positions at other specialty rental and manufacturing companies. | | The Board believes that Mr. Archer’s insight into our Company and industry from his role as our president and CEO, together with his leadership and business experience, enable him to provide meaningful guidance to our Board. |

  4. DIRECTOR NOMINEE BIOGRAPHIES

    | Key Qualifications and Skills: | | | | | | | | | | | | | | | | | | | | Leadership | Operations | Corporate Governance | Safety | Finance/Risk Management | Financial Expertise/ Literacy | Government | Marketing / Sales | Strategy | | | | | | | | | | | | M&A | Human Resources / Talent Management | Board Expertise | | | | | | |

  5. DIRECTOR NOMINEE BIOGRAPHIES

    | 2025 proxy statement | 7 |

  6. DIRECTOR NOMINEE BIOGRAPHIES

    | Alejandro (“Alex”) Hernandez | | | Independent Director Since: 2023 | Age: 47 Committees: Audit, Compensation Other Select Directorships: Electric Reliability Council of Texas, Inc. (ERCOT) | | Mr. Hernandez is an accomplished leader with over 20 years of experience in the power, utilities, renewables, nuclear, industrials and data center infrastructure sectors. ■ From November 2021 through May 2023, Mr. Hernandez served as President, Chief Executive Officer and director Talen Energy Corporation, one of the largest competitive power companies in North America, as well as Chief Executive Officer of Cumulus Data, Inc., Talen Energy Corporation’s data center business which he founded, having previously served in various roles, including Chief Financial Officer of Talen Energy Corporation. ■ From 2014 until 2015, Mr. Hernandez served as Chief Financial Officer, TerraForm Power Inc., which was sold to Brookfield Renewable Partners L.P. ■ Earlier in his career, Mr. Hernandez worked for approximately 10 years, including as a managing director, at Goldman Sachs & Co., having joined the firm in 2005. ■ Mr. Hernandez earned a Bachelor of Arts degree from Rice University, a Bachelor of Science degree from the London School of Economics (general course), and a Master of Business Administration degree from Columbia University. | The Board believes that Mr. Hernandez’s experience in finance, financial reporting, strategic planning, forecasting and M&A enable him to provide meaningful guidance to our Board and Audit Committee. |

  7. DIRECTOR NOMINEE BIOGRAPHIES

    | Key Qualifications and Skills: | | | | | | | | | | | | | | | | | | | | Leadership | Operations | Corporate Governance | Safety | Finance/Risk Management | Financial Expertise/ Literacy | Strategy | M&A | Human Resources / Talent Management |

  8. DIRECTOR NOMINEE BIOGRAPHIES

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  9. DIRECTOR NOMINEE BIOGRAPHIES

    | Martin Jimmerson | | | Independent Director Since: 2019 | Age: 61 Committees: Audit (Chair), Compensation | | Mr. Jimmerson is currently the CEO and CFO of NorAm Drilling Company, which owns and operates rigs for drilling of horizontal wells in the U.S. ■ Mr. Jimmerson joined NorAm Drilling Company in January 2017 as CFO and Interim CEO. Prior to that, he served as the Senior Vice President and CFO and later the Interim CEO and President of RigNet, Inc., from 2006 to June 2016, a global technology company that provides communications services, applications, real-time machine learning, and cybersecurity solutions. ■ Mr. Jimmerson worked for River Oaks Imaging & Diagnostic, LP, a company that provides full modality technical diagnostic services using magnetic resonance imaging and other diagnostic equipment, as their CFO from 2002 to 2005. ■ Mr. Jimmerson received a bachelor’s degree in accounting from Baylor University. | The Board believes that through Mr. Jimmerson’s experience in senior executive positions, he has significant knowledge of accounting, capital structures, finance, financial reporting, strategic planning and forecasting. Further, his experience qualifies him as an “audit committee financial expert.” He currently serves as the chair of the Audit Committee and, as the chair, he contributes significantly to the oversight of the integrity of our financial statements, internal controls and ethics and compliance functions thus enabling him to provide meaningful guidance to our Board. |

  10. DIRECTOR NOMINEE BIOGRAPHIES

    | Key Qualifications and Skills: | | | | | | | | | | | | | | | | | | Leadership | Operations | Corporate Governance | Safety | Finance/Risk Management | Financial Expertise/ Literacy | M&A | Board Expertise |

  11. DIRECTOR NOMINEE BIOGRAPHIES

    | 2025 proxy statement | 9 |

  12. DIRECTOR NOMINEE BIOGRAPHIES

    | Linda Medler | | | Independent Director Since: 2022 Age: 68 | Committees: Audit, Nominating & Corporate Governance Other U.S. Public Company Directorships within last five years: PNC Financial Services Group Other Select Directorships: Transamerica Insurance (AEGON North America), CommonSpirit Health, Arizona Cyber Threat Response Alliance (former), Operation Homefront (former) | | Ms. Medler has more than 20 years of experience managing cutting-edge cyber and technology strategies for highly regulated public and private financial institutions as well as within the highest levels of government. ■ In 2014, Ms. Medler completed 30 years of total military service, including 27 years of service in the U.S. Air Force, retiring as a Brigadier General. Her last position held was Director of Capability and Resource Integration for the United States Cyber Command. ■ She currently is Founder, President and CEO of L A Medler & Associates, LLC, providing cyber strategy and operational consulting services to a variety of commercial clients. Since October 2024, she also serves as a Principal Advisor for NATSEC, a veteran owned private equity fund. ■ Ms. Medler previously served from June 2015 to December 2017 as the Chief Information Security Officer and Director of IT Security for Raytheon Missile Systems, a major business unit of Raytheon company (now Raytheon Technologies), a technology and innovation leader specializing in defense, civil government and cybersecurity solutions. She remained at Raytheon as a Cyber Advisor until 2018. During her Air Force military service, from 1987 to 2014, she served in a myriad of leadership positions, and commanded units at the Squadron, Group and Wing level, as well as serving multiple assignments for the Joint Chiefs of Staff. ■ Ms. Medler currently serves on the board of directors for PNC Financial Services Group, Transamerica Insurance (AEGON North America), and Common Spirit Health, one the largest national non-profit healthcare systems, where she chairs the Audit and Compliance Committee. She previously served as a director for Operation Homefront, a national nonprofit supporting Veterans and their families from 2015 — 2023. ■ Since 2020, she chaired the Transamerica Risk Committee and serves on several other board committees for the firms where she is a director, including risk, compliance, technology, audit, nomination, governance committees. ■ Ms. Medler received a BBA in Management & Computer Information Systems from the University of Arkansas at Little Rock, an MS in National Security & Strategic Studies from the Naval War College, and an MBA in Management Information Systems Concentration from the University of Arizona. | The Board believes that Ms. Medler’s experience in enterprise risk oversight, cyber risk mitigation and serving in critical positions across government, private and non-profit organizations will enhance the Company’s ability to pursue strategic value-added growth opportunities within these segments, while building on the Company’s reputation as a trusted provider of critical support services to the United States Government, and thus provide meaningful guidance to our Board. Further, she is a National Association of Corporate Directors (“NACD”) Certified Director and NACD Leadership Fellow as well as a Certified Technical Expert through the Digital Directors Network. |

  13. DIRECTOR NOMINEE BIOGRAPHIES

    | Key Qualifications and Skills: | | | | | | | | | | | | | | | | | | | | Leadership | Operations | Corporate Governance | Safety | Finance/Risk Management | Government | Strategy | Cybersecurity | Human Resources / Talent Management | | | | | | | | | | | | Board Expertise | | | | | | | | |

  14. DIRECTOR NOMINEE BIOGRAPHIES

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  15. DIRECTOR NOMINEE BIOGRAPHIES

    | Pamela H. Patenaude | | | Independent Director Since: 2021 Age: 64 | Committees: Compensation (Chair), Nominating & Corporate Governance (Chair) Other U.S. Public Company Directorships within last five years: loanDepot, Inc., CoreLogic, Inc. (former) Other Select Directorships: Home Builders Institute, Habitat for Humanity International, Bipartisan Policy Center, National Housing Conference | | Ms. Patenaude is an accomplished real estate, housing policy, and disaster recovery expert with a four-decade record of achievement as an executive in government, nonprofit sector, and private industry. ■ Ms. Patenaude is an Independent Director of loanDepot, Inc., chair of the Nominating and Governance Committee and a member of the Audit Committee. ■ Ms. Patenaude is also a Trustee of the Home Builders Institute (HBI). Additionally, she serves on the Board of Directors for Habitat for Humanity International as well as the Board of Directors for the Bipartisan Policy Center and serves on the Board of Governors for the National Housing Conference. ■ Ms. Patenaude is Principal of Granite Housing Strategies, LLC, serving as a strategic advisor for clients engaged in real estate development, affordable housing, and disaster recovery management. Ms. Patenaude served as an Independent Director of CoreLogic, Inc. and was a member of the Audit, Compensation, and Strategic Planning and Acquisition Committees. ■ Ms. Patenaude served as the Deputy Secretary of the U.S. Department of Housing and Urban Development (HUD). As HUD’s Chief Operating Officer, Ms. Patenaude managed the day-to-day operations of the $52 billion cabinet level agency with a diverse portfolio of federal housing and community development programs and 7,000 employees. ■ Prior to rejoining HUD, Ms. Patenaude served as the President of the J. Ronald Terwilliger Foundation for Housing America’s Families. Previously, Ms. Patenaude was the Director of Housing Policy for the Bipartisan Policy Center. Ms. Patenaude also served as Executive Vice President of the Urban Land Institute (ULI) and Founding Executive Director of the ULI Terwilliger Center for Housing. ■ Earlier in her career, Ms. Patenaude served as Assistant Secretary for Community Planning and Development at HUD. ■ Ms. Patenaude earned a Bachelor of Science degree from Saint Anselm College and a Master of Science degree in Community Economic Development from Southern New Hampshire University. | The Board believes that Ms. Patenaude’s experience serving as a senior executive in both the federal government and nonprofit organizations enhances our ability to pursue high economic growth opportunities and builds on the foundation the Company has created as an established provider of essential service offerings to the United States Government. She is NACD “Director Certified”. Her diverse experience and NACD certification will provide meaningful guidance to the Nominating and Corporate Governance Committee as Chair, Compensation Committee as Chair as well as to our Board as the Company executes its growth strategy. |

  16. DIRECTOR NOMINEE BIOGRAPHIES

    | Key Qualifications and Skills: | | | | | | | | | | | | | | | | | | Leadership | Operations | Corporate Governance | Finance/Risk Management | Government | Strategy | Human Resources / Talent Management | Board Expertise |

  17. DIRECTOR NOMINEE BIOGRAPHIES

    | 2025 proxy statement | 11 |

  18. DIRECTOR NOMINEE BIOGRAPHIES

    | Stephen Robertson | | | Chair of the Board Since: 2019 Director Since: 2019 | Age: 64 Other U.S. Public Company Directorships within last five years: WillScot Mobile Mini Holdings Corp. (former) | | Mr. Robertson co-founded TDR Capital, a London-based private equity firm with more than €8 billion of committed capital and currently serves as a Senior Advisor. ■ As a founding partner of TDR Capital, he has experience in serving on numerous company boards and the firm’s strategic investment decisions, including acquisitions, capitalizations and monetizations. ■ Prior to co-founding TDR in 2002, Mr. Robertson was managing partner at DB Capital Partners, where he helped build the European leveraged buyout arm of Deutsche Bank into a leading buyout firm in Europe. He also previously spent a year as managing director of European Leveraged Finance at Merrill Lynch and nine years as managing director of European Leveraged Finance at Bankers Trust. | The Board believes that Mr. Robertson’s extensive board service and experience with mergers and acquisitions, private equity and leverage finance, together with his broad knowledge of our Company and the industrial services industry, enable him to provide meaningful guidance to our Board. |

  19. DIRECTOR NOMINEE BIOGRAPHIES

    | Key Qualifications and Skills: | | | | | | | | | | | | | | | | | | | | Leadership | Operations | Corporate Governance | Safety | Finance/Risk Management | Financial Expertise/ Literacy | Government | Marketing / Sales | Strategy | | | | | | | | | | | | M&A | Cybersecurity | Human Resources / Talent Management | Board Expertise | | | | | |

  20. DIRECTOR NOMINEE BIOGRAPHIES

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  21. INDEPENDENCE & OTHER MATTERS

    | Position | Fees Earned or Paid in Cash | Stock Awards(4) | All Other Compensation | Total | | Joy Berry(1) | $10,273 | $— | — | $10,273 | | John C. Dorman(2) | $193,047 | $112,206 | — | $305,253 | | Alex Hernandez | $86,667 | $112,206 | — | $198,873 | | Martin Jimmerson | $189,289 | $112,206 | — | $301,495 | | Linda Medler | $164,289 | $112,206 | — | $276,495 | | Pamela H. Patenaude | $214,289 | $112,206 | — | $326,495 | | Stephen Robertson(3) | $156,666 | $146,357 | — | $303,023 |

  22. USE OF MARKET DATA

    USE OF MARKET DATA To obtain a broad view of competitive practices among industry peers and competitors for executive talent, the Compensation Committee reviews market data for peer group companies, as well as general industry survey data. Selection of the peer companies presents certain challenges due to the limited number of directly comparable companies. Given the relatively small number of direct competitors, the Compensation Committee has expanded the peer group to include companies comparable in revenue, EBITDA, and market capitalization. The peer group is used as the primary reference point to assess the competitiveness of base salary, incentive targets, and total direct compensation awarded to the NEOs and market practices including incentive design, share utilization, and stock ownership guidelines. With the assistance of the independent compensation consultant, the peer group is evaluated annually by the Compensation Committee, making changes as appropriate, in order to ensure that, as a whole, it remains an appropriate benchmark to inform pay actions. Based on its evaluation of the 2023 peer group and in consultation with its independent compensation consultant, in 2024 the Compensation Committee approved the removal of Black Diamond Group and Dexterra Group due to undersized financials. Additionally, following its review with its independent compensation consultant, the Compensation Committee approved the addition of CoreCivic, H&E Equipment Services and The GEO Group to the 2024 peer group. For 2024 compensation decisions, the Compensation Committee utilized the peer group set forth below:

  23. USE OF MARKET DATA

    | ■ Bluegreen Vacations | ■ BrightView Holdings | ■ Cavco Industries | ■ Civeo | | ■ CoreCivic | ■ H&E Equipment Services | ■ McGrath RentCorp | ■ Playa Hotels & Resorts N.V. | | ■ SP Plus | ■ Summit Hotel Properties | ■ The GEO Group | ■ VSE | | ■ Wyndham Hotels & Resorts | | | |

  24. USE OF MARKET DATA

    Based on data compiled by FW Cook at the time of the peer group review, our revenue was the lowest among the peer group and our EBITDA and market capitalization were at the 85th and 68th percentiles, respectively, in relation to the peer group. As there is limited data on positions other than the CEO and CFO in the available peer group data, the Compensation Committee also reviews data from national, general industry survey sources when considering the market competitiveness of NEO compensation levels and market practices. The Compensation Committee does not review the specific companies included in these surveys and the data presented to the Compensation Committee is general and not specific to any particular subset of companies.

  25. BASE SALARY

    The Compensation Committee recommended increases for Messrs. Vlacich and Schrenk in connection with their promotions in February 2024. In making its recommendation, the Compensation Committee considered Messrs. Vlacich’s and Schrenk’s increased responsibilities and peer group compensation benchmarking data. The Compensation Committee recommended increases for Mr. Archer and Ms. Lewis, effective in February 2024, consistent with competitive benchmark ranges commensurate with their experience and performance.

  26. ANNUAL SHORT-TERM INCENTIVE PLAN

    ANNUAL SHORT-TERM INCENTIVE PLAN The Compensation Committee undertakes a rigorous review and analysis to establish annual performance goals under our annual short-term incentive plan. The performance levels are intended to be aggressive but realistic, to reward prudent decisions without excessive risk-taking, such that achieving threshold levels would represent minimum acceptable performance and achieving maximum levels would represent outstanding performance. The target performance goals align with our annual operating plan. Similar to previous years, the Compensation Committee established Adjusted EBITDA goals and payout levels under the annual short-term incentive plan. For 2024, the Compensation Committee set lower Adjusted EBITDA goals due to several factors. These include a non-recurring $118.2 million infrastructure revenue amortization and a $18 million reduction in facility lease revenue associated with a renewal of a government segment subcontract. These changes required recalibrating the Adjusted EBITDA goals to match the 2024 forecast, ensuring targets are challenging yet achievable. This approach aims to maintain realistic and sustainable growth. The decision to utilize Adjusted EBITDA as the core metric for our short-term incentive plan stems from a strategic alignment with our organizational goals, investor expectations, and a comprehensive assessment of key performance indicators. EBITDA is a crucial measure of operating performance that provides a clear and concise view of the Company’s profitability by excluding non-operational factors such as interest, taxes, and non-cash charges. Our Adjusted EBITDA reflects adjustments to exclude the effects of additional items, including certain items that are not reflective of the ongoing operating results of the Company. These adjustments allow us to focus specifically on core operational efficiency and performance, providing a more accurate representation of the Company’s ability to generate sustainable earnings. Investors and stakeholders increasingly rely on EBITDA as a key metric for evaluating a Company’s financial health and operational effectiveness, making it a widely recognized and accepted measure within the investment community. By aligning our short-term incentive plan with this metric, we not only enhance transparency but also demonstrate a commitment to performance metrics that resonate with our investors. Furthermore, Adjusted EBITDA serves as an effective tool for benchmarking and comparative analysis within our industry. By incorporating Adjusted EBITDA into our short-term incentive plan, we are directly linking employee incentives to the Company’s ability to outperform industry standards and deliver sustained operational excellence.

  27. ANNUAL SHORT-TERM INCENTIVE PLAN

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  28. ANNUAL SHORT-TERM INCENTIVE PLAN

    The threshold, target, stretch and maximum performance and payout opportunities under the 2024 short-term incentive plan (subject to interpolation between points), along with the actual performance achieved and related payout percentage, are set forth below.

  29. ANNUAL SHORT-TERM INCENTIVE PLAN

    | | Threshold | Target | Stretch | Maximum | Actual | | Payout %(1) | 50% | 100% | 150% | 200% | 93% | | Adjusted EBITDA(1) ($ millions) | $185 | $205 | $215 | $230 | $197 |

  30. ANNUAL SHORT-TERM INCENTIVE PLAN

    (1) Any payment will be based on linear interpolation between threshold, target, stretch and maximum award Levels. (2) Adjusted EBITDA is a non-GAAP financial measure. For a discussion of our use of non-GAAP financial measures, including a reconciliation of Adjusted EBITDA to net income (loss), please see the “Non-GAAP Financial Measures” section beginning on page 64 in Item 7 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The Compensation Committee reviews our target annual short-term incentive opportunities each year to ensure they are competitive. The target annual short-term incentive opportunity as a percentage of annual base salary for each of our NEOs in 2024 was as follows:

  31. ANNUAL SHORT-TERM INCENTIVE PLAN

    | Name | 2024 Target Short-Term Incentive (% of Base Salary) | 2024 Target Short-Term Incentive ($) | | James B. Archer | 133% | $1,130,500 | | Jason Vlacich | 85% | $348,500 | | Eric T. Kalamaras | 85% | $374,233 | | Troy C. Schrenk | 85% | $340,000 | | Heidi D. Lewis | 75% | $281,250 | | Brendan Dowhaniuk | 50% | $162,500 |

  32. ANNUAL SHORT-TERM INCENTIVE PLAN

    Based on the achievement of the 2024 Adjusted EBITDA goals and Compensation Committee adjustments, the annual short-term incentive awards earned by our NEOs for 2024 were as follows:

  33. ANNUAL SHORT-TERM INCENTIVE PLAN

    | Name | Target Annual Incentive Opportunity | Actual Payout (%) | Annual Short-Term Incentive Earned Based on Actual Payout | Committee Adjustment | Annual Short-Term Incentive Earned | | James B. Archer | $1,130,500 | 93% | $1,051,365 | $— | $1,051,365 | | Jason Vlacich | $348,500 | 93% | $324,105 | $24,395 | $348,500 | | Eric T. Kalamaras | $374,233 | 93% | $348,037 | $— | $29,003(1) | | Troy C. Schrenk | $340,000 | 93% | $316,200 | $— | $316,200 | | Heidi D. Lewis | $281,250 | 93% | $261,563 | $19,687 | $281,250 | | Brendan Dowhaniuk | $162,500 | 93% | $151,125 | $11,375 | $13,542(2) |

  34. ANNUAL SHORT-TERM INCENTIVE PLAN

    (1) Reflects a prorated payment under the 2024 annual short-term incentive plan based on the number of days worked during 2024 and the Company’s actual Adjusted EBITDA for the performance period. (2) Reflects a prorated payment under the 2024 annual short-term incentive plan based on the number of days worked during 2024 and the Executive’s performance for the performance period. For 2024, the Compensation Committee exercised its discretion to adjust short-term incentive award payouts for certain of our NEOs. This adjustment was made after careful consideration of various factors and reflects the Compensation Committee’s commitment to recognizing individual contributions and addressing the challenges faced by the Company. The Committee adjusted short-term incentive payouts to 100% for Mr. Vlacich and Ms. Lewis in light of their individual exceptional efforts in the past year. The Compensation Committee determined it was appropriate to adjust the short-term incentive payouts for Mr. Vlacich and Ms. Lewis due to their significant efforts navigating the Company through extraordinary external pressures. Their efforts during these times were essential to the Company’s ability to maintain stability and drive performance. Accordingly, the Compensation Committee deemed it appropriate to recognize Mr. Vlacich and Ms. Lewis for their individual contributions to the Company’s continued success.

  35. ANNUAL SHORT-TERM INCENTIVE PLAN

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  36. ANNUAL SHORT-TERM INCENTIVE PLAN

    Additionally, as Mr. Dowhaniuk joined the Company in December, the Compensation Committee did not view it as appropriate to evaluate him using the same metrics as the rest of the NEOs. Due to his short tenure with the Company. To reward his initial contributions to the Company, the Compensation Committee adjusted Mr. Dowhaniuk’s short-term incentive payout to 100% of target and prorated payment for days worked in 2024.

  37. EQUITY INCENTIVE PROGRAM

    EQUITY INCENTIVE PROGRAM 2024 LTI Program Our 2024 LTI program consists of RSUs and PSUs granted under the Target Hospitality Corp. 2019 Incentive Award Plan (as amended, the “Incentive Plan”):

  38. EQUITY INCENTIVE PROGRAM

    | Award Type | Link to Business and Talent Strategies | | RSUs (50% of 2024 target value) | ■ Vests in four equal annual installments on each of the first four anniversaries of the grant date, subject to continued employment ■ Realized value linked to share price while maintaining retentive value during times of volatility | | PSUs (50% of 2024 target value) | ■ Awarded to certain officers, including NEOs, to further drive sustained performance and value creation | | | ■ Increased weighting in overall LTI program from 40% in 2023 to 50% in 2024 ■ Vests subject to continued employment and achievement of performance criteria following the end of a three-year performance period ■ Realized value linked to achievement of challenging relative total shareholder return (“TSR”) and diversified Adjusted EBITDA(1) (“Diversification EBITDA”) performance measures |

  39. EQUITY INCENTIVE PROGRAM

    (1) Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is calculated as Adjusted EBITDA gross of bonus adjustments. For a discussion of our use of non-GAAP financial measures, including a reconciliation of (i) Adjusted EBITDA to net income (loss), please refer to the “Non-GAAP Financial Measures” section beginning on page 64 in Item 7 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The table below summarizes the 2024 annual equity awards (both units awarded and grant date fair value) made to our Named Executive Officers:

  40. EQUITY INCENTIVE PROGRAM

    | | 2024 Annual Equity Awards | | | | | | RSUs | | PSUs | | | Name | Target #(3) | Target Value | Target #(3) | Target Value | | James B. Archer | 100,211 | $970,042 | 100,211 | $1,161,444 | | Jason Vlacich | 39,557 | $382,912 | 23,734 | $275,077 | | Eric T. Kalamaras(1) | — | $— | — | $— | | Troy C. Schrenk | 29,008 | $280,797 | 29,008 | $336,203 | | Heidi D. Lewis | 18,460 | $178,693 | 18,460 | $213,951 | | Brendan Dowhaniuk(2) | — | $— | — | $— |

  41. EQUITY INCENTIVE PROGRAM

    (1) Mr. Kalamaras received no equity awards in 2024. (2) Excludes the RSUs granted to Mr. Dowhaniuk in connection with the commencement of his employment with the Company as described under “Employment and Separation Agreements.” (3) The number of RSUs and PSUs granted is based on a 10-day VWAP. 50% of the 2024 PSUs may be earned following the end of the three-year performance period running from January 1, 2024 through December 31, 2027 from 0% — 200% of target shares awarded based on the Company’s relative TSR performance measured against the TSR of the constituent companies in the Russell 2000 Index on the grant date. The other 50% of the 2024 PSUs may be earned from 0% to 200%

  42. EQUITY INCENTIVE PROGRAM

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  43. EQUITY INCENTIVE PROGRAM

    of target at the end of the three-year performance period running from February 29, 2024 through February 28, 2027 based on Diversification EBITDA received by the Company on a cumulative basis as of the end of the performance period, in each case, subject to continued employment on the date performance achievement is certified by the Compensation Committee. For the 2024 PSUs, the Diversification EBITDA performance measure may be earned based on the amount of qualifying EBITDA (“Qualifying EBITDA”) received during the applicable performance Period. Qualifying EBITDA is defined as EBITDA received during the performance period that is (i) incremental to any EBITDA used to determine “Baseline EBITDA” as approved in the Company’s budget for 2024 Adjusted EBITDA, and (ii) supported by (a) multi-year contracts or (b) single-year contracts where there is a reasonable expectation of extension, renewal, continuation, or any other increase in duration; provided, however, that Qualifying EBITDA does not include any amounts accounted for as occupancy-based variable services revenue generated under a former U.S. government sub-contract that was terminated effective February 21, 2025. Any determination of Qualifying EBITDA may include EBITDA growth resulting from expansion of the Company’s existing operations and EBITDA growth resulting from acquisitions. In addition, any contract assumed by the Company as a result of an acquisition will be treated as a new contract when determining Qualifying EBITDA. The Compensation Committee carefully considered a range of factors and strategic objectives when deciding to grant the 2024 PSUs based on relative TSR and Diversification EBITDA for the Company. The rationale for this decision reflects the Compensation Committee’s commitment to aligning executive compensation with the Company’s overall performance and long-term sustainability. ■ Alignment with Shareholder Interests (TSR): ■ Relative TSR as a Key Performance Metric. The Compensation Committee recognizes that relative TSR is a comprehensive measure of the Company’s performance that directly aligns with shareholder interests. By incorporating relative TSR into the performance units, executives are incentivized to focus on actions and strategies that enhance shareholder value over the long-term. ■ For the relative TSR component of the 2024 PSUs, the award level will be based on the following table:

  44. EQUITY INCENTIVE PROGRAM

    | Level | Percentile Rank vs. Comparator Group | Payout %(1) | | Maximum | 85th Percentile and above | 200% of Target Level | | Target | 50th Percentile | 100% of Target Level | | Threshold | 25th Percentile | 50% of Target Level | | <Threshold | Below 25th Percentile | 0% |

  45. EQUITY INCENTIVE PROGRAM

    (1) Any payment will be based on linear interpolation between threshold, target, and maximum award levels. Notwithstanding the preceding, if the Company’s absolute TSR over the performance period is negative, the payout percentage will be limited to 100% of target level regardless of relative TSR results. ■ TSR is calculated by dividing (a) the sum of (i) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment if applicable, and (ii) the difference between the Company’s share price at the end of each fiscal year shown and the beginning of the measurement period, and the beginning of the measurement period by (b) the Company’s share price at the beginning of the measurement period. The beginning of the measurement period for each year in the table is market close on December 31, 2020. ■ Strategic EBITDA Diversification: ■ Reducing Business Concentration Risk. The decision to diversify EBITDA reflects the Compensation Committee’s strategic approach to managing risk. By incentivizing executives based on the diversification of Adjusted EBITDA, the Compensation Committee aims to reduce the Company’s dependence on specific revenue streams or business segments. This diversification strategy enhances the Company’s resilience to market fluctuations and industry challenges. Encouraging Portfolio Optimization. Executives are encouraged to explore and invest in areas that contribute to a more diversified Adjusted EBITDA. This may involve inorganic

  46. EQUITY INCENTIVE PROGRAM

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  47. EQUITY INCENTIVE PROGRAM

    growth as well as organic growth. The Compensation Committee believes that such diversification efforts contribute to the overall health and sustainability of the Company. ■ Balancing Short-Term and Long-Term Objectives: ■ Incentivizing Strategic Decision-Making: The combination of relative TSR and Diversification EBITDA diversification strikes a balance between short-term financial performance and long-term strategic objectives. Executives are motivated to make decisions that drive immediate shareholder value while also strategically positioning the Company for sustained growth and success. ■ Holistic Performance Evaluation: The dual focus on relative TSR and Diversification EBITDA diversification ensures a comprehensive evaluation of executive performance. This approach aligns with the Compensation Committee’s commitment to rewarding executives for achieving a well-rounded set of financial and strategic goals that contribute to the Company’s overall success. 2022 PSU Outcome For the 2022-2024 performance period, the PSUs awarded in February of 2022 (the “2022 PSUs”) were earned based on the Company’s cumulative operating cash flow during the performance period, as determined based on the Net Cash Flow from Operations disclosed in the Company’s annual Form 10-K filings during the performance period. The award level was determined based on the following table:

  48. EQUITY INCENTIVE PROGRAM

    | Level | 3-Year Cumulative Operating Cash Flow ($ millions) | Payout %(1) | | Maximum | $352.8M or more | 150% of Target Level | | Target | $252 | 100% of Target Level | | Threshold | $189 | 50% of Target Level | | <Threshold | $<$189M | 0% |

  49. EQUITY INCENTIVE PROGRAM

    (1) Any payment will be based on linear interpolation between threshold, target, and maximum award Levels. At the end of the performance period, the Compensation Committee conducted an evaluation of the Company’s performance against the established metrics. The increase in the Company’s operating cash flow in 2022 and 2023 led to exceptional financial performance for the performance period, including: ■ Strong Revenue Growth: The Company experienced robust revenue growth driven by increased demand for its services and successful expansion and growth in the Government segment. ■ Cost Management: Effective cost management strategies were implemented, resulting in improved operational efficiencies and reduced expenses. ■ Strategic Investments: Strategic investments in infrastructure enhanced the Company’s capabilities and supported its growth initiatives. ■ Customer Retention: High customer retention rates and the acquisition of new clients contributed to the overall financial performance. These factors collectively led to the exceptional financial performance, culminating in the maximum achievement of the operating cash flow target for the 2022 PSUs. The cumulative Net Cash Flow from Operations for the performance period was approximately $614 million, exceeding the maximum level. Based on these results, the Compensation Committee approved a vesting percentage of 150% for the 2022 PSUs, reflecting the Company’s strong cash flow performance. The following table summarizes the 2022 PSU awards for the NEOs for the 2022 — 2024 performance period.

  50. EQUITY INCENTIVE PROGRAM

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  51. EQUITY INCENTIVE PROGRAM

    | Name | 2022 Target PSUs Awarded | Actual PSUs Vested Based on Performance | Vesting Percentage | | James B. Archer | 83,056 | 124,584 | 150% | | Jason Vlacich | 16,611 | 24,917 | 150% | | Eric T. Kalamaras(1) | 49,834 | — | — | | Troy C. Schrenk | 33,223 | 49,835 | 150% | | Heidi D. Lewis | 16,611 | 24,917 | 150% | | Brendan Dowhaniuk(2) | — | — | — |

  52. EQUITY INCENTIVE PROGRAM

    (1) Mr. Kalamaras’ 2022 PSUs were forfeited pursuant to his Separation Agreement and Release. (2) Mr. Dowhaniuk did not receive any 2022 PSUs as he joined the Company in December 2024. Other Aspects of Our Executive Compensation Program

  53. EQUITY GRANT PRACTICES AND TIMING

    EQUITY GRANT PRACTICES AND TIMING The Compensation Committee and/or the Board approves the grant of stock-based equity awards, such as PSUs and RSUs, at its regularly scheduled meetings (generally the first regularly scheduled meeting of the year, which is scheduled well in advance). In addition, the Compensation Committee has authorized, subject to various limitations, the CEO to grant stock-based equity awards to certain newly hired and existing employees, excluding executive officers and certain other senior employees. None of the Board, Compensation Committee, or executive management team engage in any market timing with regard to the stock-based equity awards made to executive officers or other award recipients. The Company does not currently grant new awards of stock options, stock appreciation rights (“SARs”), or similar option-like instruments. Accordingly, the Company has no specific policy or practice on the timing of awards of such options in relation to the disclosure of material nonpublic information by the Company. It is the Company’s practice that any stock option awards that may be granted, whether made by the Board, the Compensation Committee or the CEO have an exercise price per share equal to the fair market value of our common stock based on the closing market price per share on the grant date.

  54. AGREEMENTS WITH OUR NAMED EXECUTIVE OFFICERS

    AGREEMENTS WITH OUR NAMED EXECUTIVE OFFICERS We have entered into employment agreements and equity award agreements with each of our NEOs that provide certain benefits if such NEOs’ employment terminates as a result of the NEO’s death or disability, termination by the Company without Cause, or by the NEO for Good Reason, and, in certain cases, in connection with or following a change in control of the Company (as each such term is defined in the applicable agreement). Additionally, we entered into a Separation Agreement and Release with Mr. Kalamaras in connection with his termination of employment with the Company. Additional information regarding the employment and separation arrangements with each of our Named Executive Officers, including a quantification of benefits that would have been received by each such Named Executive Officer had his or her employment terminated on December 31, 2024, is provided below under “Potential Payments upon Termination or Change in Control.” Risk Mitigation and Other Pay Practices

  55. RISK ASSESSMENT OF COMPENSATION PROGRAM

    Company’s value or reward poor judgment by executives. Several features of the Company’s compensation program reflect sound risk management practices. Notably, the Compensation Committee believes compensation has been allocated among cash and equity and short and long-term compensation elements in such a way as to not encourage excessive risk-taking, but rather to reward meeting strategic Company goals that enhance stockholder value. In addition, the Compensation Committee believes that the mix of equity award instruments used under the Company’s long-term incentive program (full value awards as well as the multi-year vesting of equity awards) also minimize excessive risk-taking that might lead to short-term returns at the expense of long-term value creation. We also set stock ownership guidelines for our NEOs to help mitigate potential compensation risk. Based on these compensation program design features, the Compensation Committee believes that the Company’s compensation policies do not create risks that are reasonably likely to have a material adverse effect on the Company. As part of our ongoing process of evaluating our compensation program design for unintended or inappropriate levels of risk, the Compensation Committee engaged FW Cook to conduct an independent assessment of the risk in our compensation design for 2024. Through this assessment, FW Cook reviewed our annual and long-term incentive program design and determined that our program design would not encourage inappropriate risk taking. The findings of this review were discussed with management and presented to the Compensation Committee in February 2024.

  56. TAX AND ACCOUNTING IMPLICATIONS OF EXECUTIVE COMPENSATION

    | Name and Principal Position | Year | Salary(1) ($) | Bonus ($) | Stock Awards(2) ($) | Option/SAR Awards ($) | Non-equity Incentive Plan Compensation(3) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation(4) ($) | Total ($) | | James B Archer President and Chief Executive Officer | 2024 | 844,231 | — | 2,131,486 | — | 1,051,365 | — | 43,220 | 4,070,302 | | | 2023 | 794,231 | — | 1,549,619 | — | 1,064,000 | — | 49,637 | 3,457,487 | | | 2022 | 739,615 | — | 2,095,031 | — | 1,995,000 | — | 45,076 | 4,874,722 | | Jason Vlacich Chief Financial Officer and Chief Accounting Officer | 2024 | 402,944 | — | 657,989 | — | 348,500 | — | 50,748 | 1,460,181 | | | 2023 | 317,200 | — | 206,607 | — | 206,876 | — | 38,994 | 768,677 | | Eric T. Kalamaras Executive Vice President, Chief Financial Officer (former) | 2024 | 63,179 | — | — | — | 29,003 | — | 773,460 | 865,642 | | | 2023 | 438,794 | — | 619,851 | — | 374,233 | — | 57,276 | 1,490,154 | | | 2022 | 426,013 | — | 1,986,021 | — | 726,665 | — | 41,712 | 3,180,411 | | Troy C. Schrenk Executive Vice President, Operations, Chief Commercial Officer | 2024 | 397,793 | — | 617,000 | — | 316,200 | — | 43,603 | 1,374,596 | | | 2023 | 370,067 | — | 413,229 | — | 315,618 | — | 58,787 | 1,157,701 | | | 2022 | 359,288 | — | 1,788,016 | — | 612,850 | — | 38,245 | 2,798,399 | | Heidi D. Lewis Executive Vice President, General Counsel and Secretary | 2024 | 373,327 | — | 392,644 | — | 281,250 | — | 49,426 | 1,096,647 | | | 2023 | 361,238 | — | 206,607 | — | 234,325 | — | 40,128 | 842,298 | | Brendan Dowhaniuk Executive Vice President, Strategy & Corporate Development | 2024 | 31,250 | — | 143,274 | — | 13,542 | — | — | 188,066 |

  57. ERIC T. KALAMARAS, FORMER EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

    | Year | Summary Compensation Table Total for PEO ($)(1) | Compensation Actually Paid to PEO ($)(2) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(3) | Average Compensation Actually Paid to Non- PEO NEOs ($)(4) | Value of Initial Fixed $100 Investment Based On: | | Net Income ($ in 000s)(7) | Adjusted EBITDA ($ in 000s)(8) | | | | | | | Total Shareholder Return ($)(5) | Peer Group Total Shareholder Return ($)(6) | | | | 2024 | 4,070,302 | 1,957,661 | 1,199,267 | 449,550 | 612 | 223 | 71,407 | 196,717 | | 2023 | 3,457,487 | (3,703,779) | 1,064,708 | (1,049,917) | 616 | 187 | 173,700 | 344,217 | | 2022 | 4,874,722 | 25,669,657 | 2,989,405 | 12,049,682 | 958 | 128 | 73,939 | 264,714 | | 2021 | 3,581,389 | 5,136,429 | 1,593,231 | 2,408,446 | 225 | 153 | (4,576) | 119,176 |

  58. ERIC T. KALAMARAS, FORMER EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

    | Compensation Actually Paid to PEO | 2024 | 2023 | 2022 | 2021 | | Summary Compensation Table Total | 4,070,302 | 3,457,487 | 4,874,722 | 3,581,389 | | Less, value of “Stock Awards” and “Option Awards” reported in Summary Compensation Table | (2,131,486) | (1,549,619) | (2,095,031) | (850,103) | | Less, change in pension value and Non-Qualified Deferred Compensation earnings | 0 | 0 | 0 | 0 | | Plus, year-end fair value of outstanding and unvested equity awards granted in the year | 1,384,506 | 840,193 | 11,624,887 | 1,809,574 | | Plus (less), year over year change in fair value of outstanding and unvested equity awards granted in prior years | (1,621,290) | (7,410,418) | 11,217,181 | 566,716 | | Plus (less), year over year change in fair value of equity awards granted in prior years that vested in the year | 255,630 | 958,578 | 47,898 | 28,853 | | Compensation Actually Paid to Mr. Archer | 1,957,661 | (3,703,779) | 25,669,657 | 5,136,429 |

  59. ERIC T. KALAMARAS, FORMER EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

    | Average Compensation Actually Paid to Non-PEO NEOs | 2024 | 2023 | 2022 | 2021 | | Average Summary Compensation Table Total | 1,199,267 | 1,064,708 | 2,989,405 | 1,593,231 | | Less, average value of “Stock Awards” and “Option Awards” reported in Summary Compensation Table | (416,908) | (361,574) | (1,887,019) | (425,052) | | Less, change in pension value and Non-Qualified Deferred Compensation earnings | 0 | 0 | 0 | 0 | | Plus, average year-end fair value of outstanding and unvested equity awards granted in the year | 284,163 | 196,044 | 5,152,958 | 904,787 | | Plus (less), average year over year change in fair value of outstanding and unvested equity awards granted in prior years | (365,707) | (2,286,425) | 5,554,520 | 284,110 | | Plus (less), average year over year change in fair value of equity awards granted in prior years that vested in the year | (251,265) | 337,331 | 239,816 | 51,370 | | Average Compensation Actually Paid to Non-PEO NEOs | 449,550 | (1,049,917) | 12,049,682 | 2,408,446 |

  60. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    Description of Certain Relationships Between Information Presented in the Pay versus Performance Table As described in more detail in the section titled “Executive Compensation — Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, not all of those Company measures are presented in the Pay versus Performance table. In accordance with SEC rules, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance Table. Compensation Actually Paid vs. Company TSR and Peer Group TSR The following graph provides an illustration of the relationship between “Compensation Actually Paid” for the PEO and average Non-PEO NEOs and the Total Shareholder Return of Target Hospitality and the Compensation Peer Group for the fiscal years ended December 31, 2024, 2023, 2022, and 2021.

  61. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

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  62. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    Compensation Actually Paid and Net Income The following graph provides an illustration of the relationship between “Compensation Actually Paid” for the PEO and average Non-PEO NEOs and the Company’s Net Income for the fiscal years ended December 31, 2024, 2023, 2022, and 2021.

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  64. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    Compensation Actually Paid and Adjusted EBITDA The following graph provides an illustration of the relationship between “Compensation Actually Paid” for the PEO and average Non-PEO NEOs and the Company’s Adjusted EBITDA for the fiscal years ended December 31, 2024, 2023, 2022, and 2021.

  65. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

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  66. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    | PROPOSAL 4 SNAPSHOT | The Board seeks approval from stockholders to amend the Incentive Plan solely to increase the number of shares of common stock authorized for issuance under the Incentive Plan by 5,000,000 shares to a total of 13,000,000 shares. | | | The Board recommends that you vote FOR this proposal. The Board believes that the amendment to the Incentive Plan is a critical compensation component with the ability to attract, retain and motivate employees by aligning their interests with the interests of stockholders and will provide us with the continued ability to link participants’ pay to stockholder returns. |

  67. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    Overview On February 27, 2025, our Board approved and adopted, subject to stockholder approval, an amendment to the Incentive Plan, under which we would be authorized to grant cash and equity incentive awards to eligible participants. Under the Incentive Plan, as initially adopted by the Board on March 15, 2019 in connection with our business combination, the Compensation Committee was authorized to grant an aggregate of 4,000,000 shares of our common stock in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and performance compensation awards. In 2022, the Board approved an amendment to the Incentive Plan to increase the number of shares of our common stock available for issuance under the incentive Plan by 4,000,000 shares, which amendment was approved by our stockholders on May 19, 2022. This amendment to the Incentive Plan seeks to increase the number of shares of common stock authorized for issuance under the Incentive Plan by 5,000,000 shares, to a total of 13,000,000 shares (the Incentive Plan, as amended by this amendment, (the “Amended Incentive Plan”). Purpose of and Reasons for the Amended Incentive Plan The purpose of the Amended Incentive Plan is to assist us in attracting, motivating, and retaining selected individuals who serve as our employees, directors, and consultants, whose judgment, interest, and special effort is critical to the successful conduct of our operation. We believe that the equity-based awards to be issued under the Amended Incentive Plan will motivate the recipients to offer their maximum effort to us and help focus them on the creation of long-term value consistent with the interests of our stockholders. Further, we believe that grants of incentive awards are necessary to enable us to attract and retain top talent. As of the record date, shares under the Incentive Plan are largely exhausted. If the Amended Incentive Plan is not approved, we will be significantly limited in our ability to issue long-term equity awards for upcoming grant cycles and in subsequent years, which we believe will significantly impair our efforts in aligning employees’ interests with those of stockholders, hiring and retaining top talent, and affecting the pay for performance component of our compensation philosophy. Material Terms of the Amended Incentive Plan The material terms of the Amended Incentive Plan are summarized below. The Board approved and adopted, subject to stockholder approval, the Amended Incentive Plan on February 27, 2025. A copy of the Amended Incentive Plan is attached to this proxy statement as Annex A. Administration. The Compensation Committee of the Board will administer the Amended Incentive Plan. The Compensation Committee will generally have authority to designate participants, determine the type or types of awards to be granted to a participant, determine the terms and conditions of any

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  69. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    agreements evidencing any awards granted under the Amended Incentive Plan and to adopt, alter, and repeal rules, guidelines and practices relating to the Amended Incentive Plan and to make any other determination and take any other action that it deems necessary or desirable for the administration of the Amended Incentive Plan. The Compensation Committee will have full discretion to administer and interpret the Amended Incentive Plan and to make any other determination and take any other action that it deems necessary or desirable for the administration of the Amended Incentive Plan. Eligibility. Our employees, directors, officers, advisors or consultants and prospective employees, directors, officers, advisors or consultants are eligible to participate in the Amended Incentive Plan. As of the record date, we had 863 employees, 7 directors, and 1 advisor and consultants who were eligible to participate in the Amended Incentive Plan. The basis for participation in the Amended Incentive Plan is the Compensation Committee’s decision, in its sole discretion, that an award to an eligible participant will further its purposes. Number of Shares Authorized. If approved, the Amended Incentive Plan will reserve for issuance an aggregate of 13,000,000 shares of common stock. No more than 1,500,000 shares of Target Hospitality common stock may be granted under the Amended Incentive Plan to any participant during any fiscal year with respect to stock options and SARs. The maximum aggregate grant-date fair value of awards granted and cash fees paid to any non-employee director pursuant to the Amended Incentive Plan during any fiscal year may not exceed a total value of $600,000, provided that the Board may make exceptions to this limit for a non-executive Chair of the Board. Shares of Target Hospitality common stock underlying awards under the Amended Incentive Plan that are forfeited, cancelled, expired, unexercised or are settled in cash will be available again for new awards under the Amended Incentive Plan. If there is any change in our corporate capitalization, the Compensation Committee in its sole discretion may make substitutions or adjustments to the number of shares of Target Hospitality common stock reserved for issuance under the Amended Incentive Plan, the number of shares of Target Hospitality common stock covered by awards then outstanding under the Amended Incentive Plan, the limitations on awards under the Amended Incentive Plan, the exercise price of outstanding stock options and such other equitable substitution or adjustments as it may determine appropriate. Term. The Amended Incentive Plan will have a term of ten years from the date it is approved by stockholders and no further awards may be granted under the Amended Incentive Plan after that date. Awards Available for Grant. The Compensation Committee may grant awards of nonqualified stock options, incentive stock options (“ISOs”), SARs, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing. Stock Options. The Compensation Committee will be authorized to grant stock options to purchase shares of Target Hospitality common stock that are either “qualified,” meaning they are intended to satisfy the requirements of Section 422 of the Code, for ISOs, or “nonqualified,” meaning they are not intended to satisfy the requirements of Section 422 of the Code. Stock Options granted under the Amended Incentive Plan will be subject to such terms, including the exercise price and the conditions and timing of exercise, as may be determined by the Compensation Committee and specified in the applicable award agreement. In general, the exercise price per shares of Target Hospitality common stock for each stock option granted under the Amended Incentive Plan will not be less than the fair market value of such share at the time of grant. The maximum term of a stock option granted under the Amended Incentive Plan will be ten years from the date of grant (or five years in the case of ISOs granted to a 10% stockholder). However, if the stock option (including any stock options granted under the Amended Incentive Plan prior to the present amendment that are currently outstanding) would expire at a time when the exercise of the stock option by means of a cashless exercise or net exercise method (to the extent such method is otherwise then permitted by the Compensation Committee for purposes of payment of the exercise price and/or applicable withholding taxes) would violate applicable securities laws or any securities trading policy adopted by us, the expiration date applicable to the stock option will be automatically extended to a date that is 30 calendar days following the date such cashless exercise or net exercise would no longer violate applicable securities laws or applicable securities trading policy (so long as such extension does not violate Section 409A of the Code), but not later than the expiration of the original exercise period. Unless otherwise provided in an award agreement, stock options granted under the Amended Incentive Plan will vest on the fourth anniversary of the grant date. Payment in respect of the exercise of a stock option may be made in cash or by check, by surrender of unrestricted shares (at their fair market value

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  71. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    on the date of exercise) that have been held by the participant for any period deemed necessary by our accountants to avoid an additional compensation charge or have been purchased on the open market, or the Compensation Committee may, in its discretion and to the extent permitted by law, allow such payment to be made through a broker-assisted cashless exercise mechanism, a net exercise method, or by such other method as the Compensation Committee may determine to be appropriate. Stock Appreciation Rights. The Compensation Committee will be authorized to award SARs under the Amended Incentive Plan. SARs will be subject to the terms and conditions established by the Compensation Committee. A SAR is a contractual right that allows a participant to receive, either in the form of cash, shares of Target Hospitality common stock or any combination of cash and shares of Target Hospitality common stock, the appreciation, if any, in the value of a common share over a certain period of time. A stock option granted under the Amended Incentive Plan may include SARs and SARs may also be awarded to a participant independent of the grant of a stock option. SARs granted in connection with a stock option shall be subject to terms similar to the stock option corresponding to such SARs. SARs shall be subject to terms established by the Compensation Committee and reflected in the award agreement. Unless otherwise provided in an award agreement, SARs granted pursuant to the Amended Incentive Plan will vest and become exercisable on the fourth anniversary of the grant date. Restricted Stock. The Compensation Committee will be authorized to award restricted stock under the Amended Incentive Plan. Unless otherwise provided by the Compensation Committee and specified in an award agreement, restrictions on restricted stock will lapse after four years of service with us. The Compensation Committee will determine the terms of such restricted stock awards, including any dividend or voting rights. Restricted stock is shares of Target Hospitality common stock that generally are non-transferable and subject to other restrictions determined by the Compensation Committee for a specified period. Unless the Compensation Committee determines otherwise or specifies otherwise in an award agreement, if the participant terminates employment or services during the restricted period, then any unvested restricted stock is forfeited. Dividends, if any, that may have been withheld by the Compensation Committee shall be distributed to the Participant in cash or, at the sole discretion of the Compensation Committee, in shares of Target Hospitality common stock having a fair market value equal to the amount of such dividends, upon the release of any applicable restrictions, if the applicable share is forfeited, the participant shall have no right to such dividends (except as otherwise provided in the applicable award agreement). Restricted Stock Unit Awards. The Compensation Committee will be authorized to award restricted stock unit awards. Unless otherwise provided by the Compensation Committee and specified in an award agreement, restricted stock units will vest after four years of service with us. The Compensation Committee will determine the terms of such restricted stock units, including any dividend rights. Unless the Compensation Committee determines otherwise or specifies otherwise in an award agreement, if the participant terminates employment or services during the period of time over which all or a portion of the units are to be earned, then any unvested units will be forfeited. At the election of the Compensation Committee, the participant will receive a number of shares of Target Hospitality common stock equal to the number of units earned or an amount in cash equal to the fair market value of that number of shares of Target Hospitality common stock at the expiration of the period over which the units are to be earned or at a later date selected by the Compensation Committee. Dividends, if any, that may have been withheld by the Compensation Committee shall be distributed to the Participant in cash or, at the sole discretion of the Compensation Committee, in shares of Target Hospitality common stock having a fair market value equal to the amount of such dividends, upon the release of any applicable restrictions, if the applicable share is forfeited, the participant shall have no right to such dividends (except as otherwise provided in the applicable award agreement). Stock Bonus Awards. The Compensation Committee will be authorized to grant awards of unrestricted shares of Target Hospitality common stock or other awards denominated in shares of Target Hospitality common stock, either alone or in tandem with other awards, under such terms and conditions as the Compensation Committee may determine. Performance Compensation Awards. The Compensation Committee will be authorized to grant any award, including in the form of cash, under the Amended Incentive Plan in the form of a performance compensation award by conditioning the vesting of the award on the satisfaction of certain performance goals, measured on an absolute or relative basis. The Compensation Committee may establish these performance goals with reference to one or more of the following: (i) net earnings or net income (before

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  73. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    or after taxes); (ii) basic or diluted earnings per share (before or after taxes); (iii) net revenue or revenue growth; (iv) gross profit or gross profit growth; (v) operating profit (before or after taxes); (vi) return measures (including, but not limited to, return on assets, capital, invested capital, equity, or sales); (vii) cash flow (including, but not limited to, operating cash flow, free cash flow, net cash provided by operations and cash flow return on capital); (viii) financing and other capital raising transactions (including, but not limited to, sales of the Company’s equity or debt securities); (ix) earnings before or after taxes, interest, depreciation and/or amortization; (x) gross or operating margins; (xi) productivity ratios; (xii) share price (including, but not limited to, growth measures and total stockholder return); (xiii) expense targets; (xiv) margins; (xv) productivity and operating efficiencies; (xvi) objective measures of customer satisfaction; (xvii) customer growth; (xviii) working capital targets; (xix) measures of economic value added; (xx) inventory control; (xxi) enterprise value; (xxii) sales; (xxiii) debt levels and net debt; (xxiv) combined ratio; (xxv) timely launch of new facilities; (xxvi) client retention; (xxvii) employee retention; (xxviii) timely completion of new product rollouts; (xxix) cost targets; (xxx) reductions and savings; (xxxi) productivity and efficiencies; (xxxii) strategic partnerships or transactions; and (xxxiii) objective measures of personal targets, goals or completion of projects; or any combination of the foregoing. Minimum Vesting. Notwithstanding any provision of the Amended Incentive Plan to the contrary, awards granted under the Amended Incentive Plan (other than cash-based awards) will vest no earlier than the first anniversary of the date on which the award is granted. Certain awards are exempt from the minimum vesting requirement, which include any (i) Substitute Awards (as defined in the Amended Incentive Plan), (ii) common shares delivered in lieu of fully vested cash awards, (iii) awards to non-employee directors that vest on the earlier of the one-year anniversary of the date of grant and the next annual meeting of stockholders which is at least 50 weeks after the immediately preceding year’s annual meeting, and (iv) additional awards the Compensation Committee may grant. The minimum vesting requirement does not apply to the Compensation Committee’s discretion to provide for accelerated exercisability or vesting of any award including, but not limited to, cases of retirement, death, disability or a Change in Control (as defined in the Amended Incentive Plan). Transferability. Each award may be exercised during the participant’s lifetime only by the participant or, if permissible under applicable law, by the participant’s guardian or legal representative and may not be otherwise transferred or encumbered by a participant other than by will or by the laws of descent and distribution. The Compensation Committee, however, may permit awards (other than ISOs) to be transferred to family members, a trust for the benefit of such family members, a partnership or limited liability company whose partners or stockholders are the participant and his or her family members or anyone else approved by it. Amendment and Termination. In general, the Board may amend, suspend or terminate the Amended Incentive Plan at any time. However, stockholder approval to amend the Amended Incentive Plan may be necessary if the law or the Amended Incentive Plan so requires. No amendment, suspension or termination will impair the rights of any participant or recipient of any award without the consent of the participant or recipient. Change in Control. Except as otherwise provided in an award agreement or the Amended Incentive Plan, if a participant experiences a “Qualifying Termination” (as defined in the Amended Incentive Plan), in the event of a “Change in Control” (as defined in the Amended Incentive Plan), the Compensation Committee may provide that all outstanding stock options and equity awards (other than performance compensation awards) issued under the Amended Incentive Plan will become fully vested and performance compensation awards will vest based on the level of attainment of the specified performance goals. The Compensation Committee may, in its discretion, cancel outstanding awards and pay the value of such awards to the participants in connection with a Change in Control.

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  75. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    Material U.S. Federal Income Tax Consequences The following is a general summary under current law of the principal United States federal income tax consequences related to awards under the Amended Incentive Plan. This summary deals with the general federal income tax principles that apply and is provided only for general information. Other kinds of taxes, such as state, local and foreign income taxes and federal employment taxes, are not discussed. This summary is not intended as tax advice to participants, who should consult their own tax advisors. Non-Qualified Stock Options. If an optionee is granted a non-qualified stock option under the Amended Incentive Plan, the optionee should not have taxable income on the grant of the stock option. Generally, the optionee should recognize ordinary income at the time of exercise in an amount equal to the fair market value of the shares acquired on the date of exercise, less the exercise price paid for the shares. The optionee’s basis in the common stock for purposes of determining gain or loss on a subsequent sale or disposition of such shares generally will be the fair market value of Target Hospitality common stock on the date the optionee exercises such stock option. Any subsequent gain or loss will be taxable as a long-term or short-term capital gain or loss. We or our subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the optionee recognizes ordinary income. Incentive Stock Options. A participant receiving ISOs should not recognize taxable income upon grant. Additionally, if applicable holding period requirements are met, the participant should not recognize taxable income at the time of exercise. However, the excess of the fair market value of the shares of Target Hospitality common stock received over the ISO exercise price is an item of tax preference income potentially subject to the alternative minimum tax. If stock acquired upon exercise of an ISO is held for a minimum of two years from the date of grant and one year from the date of exercise and otherwise satisfies the ISO requirements, the gain or loss (in an amount equal to the difference between the fair market value on the date of disposition and the exercise price) upon disposition of the stock will be treated as a long-term capital gain or loss, and we will not be entitled to any deduction. If the holding period requirements are not met, the ISO will be treated as one that does not meet the requirements of the Code for ISOs and the participant will recognize ordinary income at the time of the disposition equal to the excess of the amount realized over the exercise price, but not more than the excess of the fair market value of the shares on the date the ISO is exercised over the exercise price, with any remaining gain or loss being treated as capital gain or capital loss. We are not entitled to a tax deduction upon either the exercise of an ISO or upon disposition of the shares acquired pursuant to such exercise, except to the extent that the participant recognizes ordinary income on disposition of the shares. Stock Appreciation Rights. Generally, a participant will recognize ordinary income upon the receipt of payment pursuant to SARs in an amount equal to the aggregate amount of cash and the fair market value of any shares of common stock received. We or our subsidiaries or affiliates generally will be entitled to a corresponding tax deduction equal to the amount includible in the participant’s income. Restricted Stock. A participant should not have taxable income on the grant of unvested restricted stock, nor will we or our subsidiaries or affiliates then be entitled to any deduction, unless the participant makes a valid election under Section 83(b) of the Code. However, when restrictions on shares of restricted stock lapse, such that the shares are no longer subject to a substantial risk of forfeiture, the participant generally will recognize ordinary income, and we or our subsidiaries or affiliates will be entitled to a corresponding deduction in an amount equal to the difference between the fair market value of the shares at the date such restrictions lapse over the purchase price, if any, paid for the restricted stock. Stock bonus awards are taxed in a similar manner as when a restricted stock award is no longer subject to a substantial risk of forfeiture. If the participant makes a valid election under Section 83(b) of the Code with respect to restricted stock, the participant generally will recognize ordinary income at the date of issuance of the restricted stock in an amount equal to the difference, if any, between the fair market value of the shares at that date over the purchase price, if any, for the restricted stock, and we or our subsidiaries or affiliates will be entitled to a deduction for that same amount. Restricted Stock Units. A participant will not recognize taxable income at the time of the grant of the restricted stock units, and neither we nor our subsidiaries or affiliates will be entitled to a deduction at that time. When a restricted stock unit is paid, whether in cash or common stock, the participant will have

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  77. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    ordinary income equal to the fair market value of the shares delivered or the cash paid, and we or our subsidiaries or affiliates will be entitled to a corresponding deduction. Cash-Based Awards. A participant generally will not recognize taxable income at the time of the grant of a cash-based award, and neither we nor our subsidiaries or affiliates will be entitled to a deduction at that time. When any such cash-based award is paid, whether in cash or common stock, the participant will have ordinary income equal to the cash paid, and we or our subsidiaries or affiliates will be entitled to a corresponding deduction. Section 409A of the Code Certain types of awards under the Amended Incentive Plan may constitute, or provide for, a deferral of compensation subject to Section 409A of the Code. Unless certain requirements set forth in Section 409A of the Code are complied with, holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the time of vesting instead of the time of payment) and may be subject to an additional 20% tax (and, potentially, certain interest and penalties). To the extent applicable, the Amended Incentive Plan and awards granted under the Amended Incentive Plan are intended to be structured and interpreted in a manner intended to either comply with or be exempt from Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance that may be issued under Section 409A of the Code. To the extent determined necessary and appropriate by the plan administrator, the Amended Incentive Plan and applicable award agreements may be amended to further comply with Section 409A of the Code or to exempt the applicable awards from Section 409A of the Code. Deductibility of Executive Compensation Section 162(m) of the Code places a limit of $1,000,000 on the amount of compensation that we are allowed to deduct in any taxable year with respect to each “covered employee” within the meaning of Section 162(m) of the Code, including payments made under the Amended Incentive Plan. The Compensation Committee believes that the potential deductibility of the compensation payable under the Amended Incentive Plan and its other compensation plans and arrangements should be only one of a number of relevant factors taken into consideration in establishing those plans and arrangements for our executive officers and not the sole governing factor. Awards Subject to Shareholder Approval The aggregate number of shares of Common Stock issuable under the Incentive Plan, prior to amendment, may not exceed 8,000,000. As of the record date, the Company has awarded an aggregate of 2,992,857 PSUs contingent upon shareholders’ approval of this Proposal 4. If the Amended Incentive Plan is approved, after taking into account the awards issued subject to shareholder approval of the Amended Incentive Plan assuming maximum performance, an aggregate of 2,195,682 shares of Common Stock will be available for future grant under the Amended Incentive Plan (subject to adjustment in the event of a stock split, stock dividend, recapitalization, reorganization, or similar transaction). The table below presents the number of PSU awards that are subject to shareholder approval of this Proposal 4 that would be received by the executive officers, executive officers as a group, non-executive directors as a group and non-executive officer employees as a group. The awards outlined below were approved by the Compensation Committee but were conditioned upon shareholder approval of the Amended Incentive Plan. Consequently, these awards will be settled in cash if shareholders do not approve this Proposal 4.

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  79. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    | Name and Position | Dollar Value(1) | Target PSUs (#) | Maximum PSUs (#) | | James B. Archer President and Chief Executive Officer | $2,025,269 | 2,169,643 | 2,339,286 | | Jason Vlacich Chief Financial Officer and Chief Accounting Officer | $628,818 | 653,571 | 707,142 | | Troy C. Schrenk Senior E.V.P., Operations and Chief Commercial Officer | $389,419 | 49,107 | 98,214 | | Heidi D. Lewis E.V.P., General Counsel and Secretary | $283,212 | 35,714 | 71,428 | | Brendan Dowhaniuk E.V.P., Strategy & Corporate Development | $247,813 | 31,250 | 62,500] | | Executive Officer Group | $3,574,531 | 2,939,285 | 3,278,570 | | Non-Executive Officer Employee Group | $424,818 | 53,571 | 107,142 |

  80. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    (1) The dollar value to be received in connection with these awards is not determinable. New Plan Benefits Grants of awards under the Amended Incentive Plan are subject to the discretion of the plan administrator. Therefore, other than the conditional grants described above, it is not possible to determine the future benefits that will be received by participants under the Amended Incentive Plan. Equity Compensation Plan Information On March 6, 2019, our shareholders approved the Incentive Plan in connection with the business combination. The Incentive Plan is administered by the Compensation Committee. Under the Incentive Plan, the Compensation Committee may grant an aggregate of 4,000,000 shares of Common Stock in the form of stock options, SARs, restricted stock, RSUs, stock bonus awards, and performance compensation awards. On May 19, 2022, the Company’s stockholders approved an amendment to the Incentive Plan to increase the number of shares authorized under the Incentive Plan by 4,000,000 shares. As of December 31, 2024, 10,919,715 securities had been granted under the Incentive Plan, excluding 116,837 RSUs paid in cash, and including 1,578,537 of SARs, which were settled in cash.

  81. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    | Plan Category | Common shares to be issued upon Exercise of Outstanding Options, Restricted Stock Units, and Performance Stock Units (a) | Weighted Average Exercise Price of Outstanding Options | Common Shares Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Common Shares Reflected in Column (a) | | Equity compensation plans approved by Target Hospitality stockholders(1) | 2,748,593 | $7.38 | 953,569 | | Equity compensation plans not approved by stockholders | — | — | — | | Total | 2,748,593 | $7.38 | 953,569 |

  82. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    The number of common shares reported in Column (a) excludes shares associated with grants that were withheld for tax liabilities and grants that were forfeited or expired on or before December 31, 2024, as shares associated with grants that were withheld for tax liabilities and forfeited and expired grants are available for reissuance under the Incentive Plan. The amounts and values in Column (a) comprise 985,077 equity-based RSUs at a weighted average grant price of $7.60, 1,401,407 equity-based PSUs (assumed at a payout of 100% of Target) at a weighted average grant price of $6.02, and 362,109 stock options at a weighted average exercise price of $7.38. For additional information on the awards outstanding under the Plan, see Note 17 in the audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K.

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  84. Description of Certain Relationships Between Information Presented in the Pay versus Performance Table

    Other than compensation arrangements, we describe below transactions to which we were a party or will be a party, in which: ■ the amounts involved exceeded or will exceed $120,000; and ■ any of our directors, executive officers, or holders of more than 5% of our capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest. Compensation arrangements for our directors and NEOs are described elsewhere in this proxy statement. The following persons and entities that participated in the transactions listed in this section were “related persons” (as defined below) at the time of the transaction: